Remove Uncertainty and Risk

The critical balance point in banking is to undertake just the right amount of risk and have on hand just the right amount of reserves. The key to success is measurement of capital (easy to do) and risk (hard to do) for that balance. Understanding risk is critically important, IDC Financial Insights estimates that the worldwide risk IT and services market will grow to $97.3 billion and will account for 18.2% of overall IT spend by 2018. An important segment of this market is known as risk data aggregation and risk reporting.Financial_PullQuote circle_9-4-14

Data integrity is the underlying requirement in all measures of financial services risk; it is what gives bankers and regulators the assurance that information conveyed in data is trustworthy. DataDNA is designed to enable total trust in data, and therefore provides:

    • A unified view of all data sources and their integrity related to risk and compliance
    • Heredity of all transactions
    • Data transformation from a crawl back process and in real time
    • Rules for pattern recognition and learning
    • Identification of suspect data elements – with heredity tracing upstream to origin for root causes as well as downstream for consequences
    • The ability for “deep-dives” of certification processes and all compliance reporting

CirclesBullet36px Today’s Challenge

The financial services industry (commercial banking, capital markets/investment banks and insurance companies) is experiencing a dramatic and overwhelming increase in regulatory reporting requirements. Due to these regulatory requirements, financial institutions both in the United States and internationally need to conduct data validation processes to correctly assess the risk in their portfolios and assure they are properly reporting them, while setting aside the appropriate capital allocation based on these assessments. Presently, most of these reviews and certification procedures are being conducted with a heavy reliance on a manual process.

The regulations the US institutions are facing are:

Basel Accord (Basel II, III & IV) – The purpose of the accord is to ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses.

CCAR (Comprehensive Capital Analysis and Review) – These are guidelines that provide a common, conservative approach to ensure that bank holding companies hold adequate capital to maintain ready access to funding, continue operations and meet their obligations to creditors and counterparties, and continue to serve as credit intermediaries, even under adverse conditions.

Dodd-Frank (Dodd-Frank Wall Street Reform and Consumer Protection Act) – The legislation aims to prevent another significant financial crisis by creating new financial regulatory processes that enforce transparency and accountability while implementing rules for consumer protection.

International institutions are also encountering the Basel Accord from a regulatory perspective and, in addition, are dealing with the following:

Markets in Financial Instruments Directive (MiFID) – MiFID is a European Union (EU) law that provides harmonized regulation for investment services across the 31 member states of the European Economic Area. The main objectives of the Directive are to increase competition and consumer protection in investment services.

Solvency II Directive – This Directive codifies and harmonizes regulation in European Union (EU) member states. It put into place capital requirements for insurers to reduce the risk that they would be unable to meet obligations when an unusually high number of claims have been made.

CirclesBullet36px Meeting the Challenge

Diginome’s DataDNA® increases the efficiency by exposing errors through a complete automation and computerization process that will provide a dramatic improvement to an institution’s abilities to respond to all integrity discrepancies identified, in addition to easily visualize these issues via several obedience and workflow reporting methods (e.g., business rules, visualization & analysis dashboard views, and interactive/browser-based features). DataDNA gives institutions the capacity to identify, trace, monitor and amend all Key Data Elements (KDEs) within each data environment proactively and at much lower cost than these institutions are experiencing today. Through the discovery, detection, monitoring and reporting functions in the application, DataDNA will deliver capabilities to:

  • Execute a discovery and detection process to identify, define and assist in mapping all metadata definitions across disparate data sources of all KDEs for each customer data record, and to continue reexamining the KDE structures over time.
  • Assist in establishing appropriate business rules for data validation, certification and governance processes.
  • Put into place an ongoing monitoring process that will oversee data validation, data certification, transparency & management processes of all KDEs, such as: missing or dropped data values, improper data values and evaluation of transformations related to the movement of data between environments, including the validation of the same data value regardless of the underlying data type (cross-alpha, -numeric, or -alphanumeric comparison/validation).
  • Put into place a workflow and metrics reporting process that will meet all operational and compliance reporting requirements.

Once the discovery process has been completed, and the institution has agreed to their data governance practices and defined their business rules for monitoring data, DataDNA® agents/listeners can be deployed for the targeted data sources and monitoring can begin.

Diginome is a member of the American Bankers Association (ABA)

american bankers association logo

Contact us to find out how DataDNA can help meet your financial-related information integrity needs.